African Development Bank President Akinwumi Adesina.
In an effort to raise up to $1.5 billion for green financing by 2030, the African Development Bank (AfDB) has begun establishing four green banks throughout the continent.
The African Green Bank Initiative was prompted to take action in response to the UN’s climate crisis Conference of the Parties (COP) meetings failing to provide adequate climate finance.
In order to give local banks the technological capacity to draw in climate finance from both domestic and foreign investors, the AfDB is leading the green investment facilities in financial institutions in Benin, Ivory Coast, Morocco, and Egypt.
The African Green Bank Initiative, launched at COP27 in Egypt, aims to establish large green banks in Africa to fund transformative climate projects. The initiative aims to improve Africa’s climate finance position.
The first green banks were launched in May through partnerships with Ivory Coast’s National Investment Bank and Benin’s La Caisse des Dépôts et Consignations du Bénin. In December, the AfDB plans to launch green banks in Morocco and Egypt, further enhancing Africa’s climate finance capabilities.
“The fact that African governments and financial institutions have put green banks at the top of the agenda shows that Africa is taking its climate finance needs into its own hands,” Coordinator for the African Green Bank Initiative Audrey-Cynthia Yamadjako stated.
The African Green Bank Initiative aims to address the lack of climate finance in Africa by 2030, with an estimated $2.8 trillion needed to meet the Paris Agreement Nationally Determined Contributions.
Africa receives only 3% of global climate finance, making it highly vulnerable to extreme weather shocks. Despite rich countries promising $100 billion a year to help developing nations fight climate change at COP15 in 2009, funding has been scarce.
The initiative will roll out large numbers of green banks across the continent to attract climate finance from international and local investors. Green banks overcome traditional barriers to investment, making potential climate projects more attractive and less risky for investors and climate funds.
The initiative also helps finance government-led green banks that have already been created. In October, the AfDB and the Green Climate Fund raised concessional funding for Rwanda’s green bank, Ireme Invest, and participated in the bank’s total capitalisation of $142 million from development agencies.